Q&A: Sen. Jeff Merkley on Bernanke Confirmation Battle

Sen. Jeff Merkley (D., Ore.) last month became the first Democrat to oppose Ben Bernanke’s confirmation for a second term as Federal Reserve chairman. (The leading liberal against Bernanke, Sen. Bernie Sanders of Vermont, is an independent.) He’s been joined now by three other Democrats and a growing list of Republicans. We talked with him about how the Bernanke vote is shaping up among Democrats:

From where you stand, how does this nomination for Chairman Bernanke look right now?

A lot of folks have been coming up to me in the hall, saying that they want more information and that they’re seriously considering voting against him, or that they’re leaning towards voting against him.

Are they asking you for more information?

Some have. … The main points I’ve been making are that there are at least four major issues that happened in the course of the last eight years: expansion of proprietary trading, derivatives, the lifting of leverage and the failure to address the dysfunction in the [regulation of] mortgages — that is, the kickbacks, the yield spread premiums and the prepayment penalties. While not all of these were the responsibility of the Fed, very much in his role as chair of the Council of Economic Advisers, as a member of the Fed, as chair of the Fed, he was at the economic policy table and did not raise concerns about these major issues that had systemic impact.

We’re hearing that about 10 to 15 members are opposed from the Democratic side. Is that right?

I have not tried to tally folks, but there’s nothing in that number that I would react to and say that’s off base. But a bunch of folks have said they’re wrestling with it, or they’re leaning. I don’t know that 10 to 15 have in any public way said that they clearly are opposed.

Are the political ramifications of the Massachusetts election affecting the Bernanke vote substantially?

I don’t really think that’s what’s going on here. I think what’s going on is that folks are very aware that many of the policies we worked on this last year were addressing the potential plunge into a Great Depression — unemployment going up, major institutions on the verge of collapse that could have caused others to collapse. We did a lot to those stabilize financial institutions. We’ve got to pivot to fighting for the financial success of our families. … Here we have an economic policy leader, he did a good job with the fire hose this last year. But he certainly also — in his roles over the last eight years — he helped create the circumstances that set the house on fire. Is he really the person you want now to be the carpenter to rebuild the house?

Do you have any worries about how a Senate vote against Bernanke might influence financial markets here and abroad?

This is always raised in regard to nominations. I think one of the reasons folks have been hesitant despite Bernanke’s involvement in burning down our economic house has been not to upset Wall Street. But what is going to have the biggest impact in the long term: Having a person in economic leadership that has missed every significant systemic risk development, putting them in charge, or putting someone in charge who has the ability to see those risks and respond in an appropriate way, to lean into the wind?